Running away from responsibility?
Nike – the changing face of sportswear’s biggest brand
From 1992 to 2000 Nike was the target of a boycott campaign which has become an object lesson on how multinational corporations can be brought to account by ordinary consumers. According to Naomi Klein in No Logo, it was one of three campaigns “that stand out for having reached far beyond activist circles and deep into public consciousness.” (The other two were Shell and McDonald’s). Nike was targeted by campaigners because it was the best selling brand, and also because it initially denied responsibility for anything occurring at its subcontractor factories. In 1998 there were international Nike days of action every six months and in October that year 85 cities in thirteen countries participated. At the height of the boycott Nike revenues fell by 16% in one financial quarter and its share price fell by 57% between February 1997 and September 1998.(1)
Where it is now?
Visiting the Nike website in April 2012, users can click on an interactive map of the world to find out more detail on any one of its 612 contract factories in 46 countries.(2) By clicking on links on this map, it is possible to drill down through China to a list of seven factories in Qingdao (northern China) to find one at 49 Yangung Rd which employs 873 people of whom 43% are women.(3)
On the Fair Labor Association (FLA) website visitors can download any one of 164 reports of Nike factory inspections carried out by independent third parties. One 10 page report, for example, from a Vietnamese Finishing Factory with 400 staff, shows that “at least one fire extinguisher in the cutting room was discharged, blocked and not checked since June 2010” and that there were “inconsistencies between off-site interview reports of excess overtime until 10pm and recent factory records.”(4) The FLA report doesn’t name the factories (it uses an identifying code) and there are fewer reports than factories, but Nike is now widely acknowledged to be at the leading edge of a flawed-but-radical new transparency over how and where consumer products come from.
This is not the same as saying the company is now untarnished. Systemic problems still exist and some of these are covered in our Company Profiles. Nevertheless for a company which 20 years ago was denying that workers’ rights at supplier factories were any of its concern, Nike has come a long way. From being the bête noir of campaigners around the world, it has learned and is now recognised as a leading example of good practice in the footwear and clothing sectors.(5)
Greenpeace’s Toxics Campaign
In July 2011, Greenpeace released a report detailing toxic chemicals being released into the Yangtze and Pearl rivers in China by factories producing clothing for a wide range of consumer brands. Its accompanying campaign began by targeting Nike and Adidas in the language of competitive sport: “Game on, Nike and Adidas. Greenpeace is calling you out to see which one of you is stronger on the flats, quicker on the breaks, turns faster and plays harder at a game we’re calling Detox. Who’ll be the first to take action and eliminate hazardous chemical discharges from their supply chain? Who will be the champion of a toxic-free future?”
After just five weeks, on August 18th Nike committed to working up a plan for a toxics-free production system by 2020. By August 24th Adidas and Puma had signed up to work with Greenpeace and six months later H&M, C&A and Li-Ning had also joined the list of companies to commit.
The word ‘boycott’ was never used, yet it took Nike only five weeks – not eight years of grudging concessions – to reach a place that campaigners were happy with. The lessons of the 1990s boycott had been painfully learned: if there’s a case to answer, it’s better to concede early rather than hoping it will go away.
Effects across the sector
As result of what happened to Nike, all the big players in the sportswear sector have quietly moved to the same place to avoid being targeted next – just as campaigners might have hoped. Adidas, Puma, Reebok and Timberland all now practice the same kind of transparency regarding supply chain labour audits, and we have already seen what has happened with the toxics campaign.
It’s easy to look at some of the other stories of ongoing workers’ rights problems in this Sportswear buyers’ guide, and imagine that no progress has been made. This is not true. There are ongoing problems with freedom of association, living wages and working hours, but there has been measurable reduction in the use of child labour, forced labour and in factory health and safety risks.(6)
And even the critics of this approach have seen movement on systemic issues like problems of freedom of association. In June 2011 the Playfair campaign arranged a signed agreement between Indonesian trades unions, supplier factories and brands including Nike, Adidas and Puma to address core labour rights issues in the country.
And in April 2012 Puma was listed as the number 1 ‘global sustainability leader’ out of more than 2,000 multinationals assessed by UK ethical investment research group EIRIS.
Who knows where this race to the top might end?
Adidas, which also owns Reebok, is currently one of the major sponsors of the Olympic games.
This company is one of a number that recently came under close scrutiny from Greenpeace for its record on toxics. Such was the pressure exerted by campaigners that Adidas has now publicly committed to eliminate all discharges of hazardous chemicals throughout their supply chain and across the entire life-cycle of their products by 2020.(1) Read more about the campaign above.
Sadly its record on righting the wrongs committed against workers in its supply chain is not so exemplary. In May this year Clean Clothes Campaign Germany reported that 2,800 Indonesian garment workers producing Adidas apparel for U.S. universities were demanding the company pay €1.4million in severance pay legally owed to them after their factory closed. The workers from the now-closed factory sewed Adidas apparel for $0.60 an hour, and were left without their $3.3 million in legally-owed severance pay when the factory closed in April last year.
While the other companies that placed orders in the factory have paid a portion of the severance, Adidas is the only major buyer that has refused to contribute a penny. This was despite the company posting first quarter net profits of €289 million and CEO Herbert Hainer earning a total compensation of €5,967,000 in 2011 – four times the sum owed to the 2,800 workers.(2)
Meanwhile, earlier in the year, campaign group War On Want published a report called ‘Race to the Bottom: Olympic sportswear companies’ exploitation of Bangladeshi workers.’ This detailed a number of abuses suffered by the workers making goods for three Olympic sportswear companies, including Adidas.
At factories supplying Adidas, the basic salary of the lowest paid workers was just 72p a day. This situation forced many into working overtime with some working over 60 hours a week, contrary to stipulations in Adidas’ own code of conduct and in Bangladeshi law.
Bullying and discrimination were also found to be rife. Five people had been pushed by their managers and the same number threatened with being sent to jail for speaking out, while women reported sexual harassment and denial of basic maternity rights.(3)
The company is also present in a number of countries considered by Ethical Consumer to be governed by oppressive regimes. These include Vietnam, China, Cambodia, India, Russia, Kazakhstan, Israel, Columbia, Philippines, Thailand and Venezuela.(4) It was also present in a number of tax havens including Panama, Switzerland, Hong Kong, Uruguay and Puerto Rico.(5)
Brooks is ultimately owned, via a complex structure, by Warren Buffet’s Berkshire Hathaway Inc. This company owns various brands operating in a number of different markets and falls down in the ratings for its significant shareholdings in Coca-Cola and American Express. Warren Buffet is generally well regarded as the liberal philanthropist of American business with his recent call for higher taxes for the super-rich.
Fila, which is registered in the tax haven of Luxembourg, scores badly for its lack of policies in a number of areas considered important for companies operating in this sector including environmental reporting, cotton production and the use of PVC.
The company was also last year named in a report by the International Textile, Garment and Leather Workers’ Federation (ITGLWF), for exploiting labour in developing countries. The report, ‘An Overview of Working Conditions in Sportswear Factories in Indonesia, Sri Lanka & the Philippines’ examined the working conditions in 83 garment factories.7
Many problems were found in the factories including:
- The majority of factories didn’t pay the local legal minimum wage.
- There were instances of forced overtime (in some cases to the tune of 40 hours per week)
- Seven of the factories were found to prohibit trade union representation.
- Some factories in Sri Lanka made pregnant workers carry out their usual heavy-duty tasks up to 7 months into their pregnancy.
- A small number of factories were found to carry out pregnancy testing before hiring employees
New Balance has phased out the use of PVC but still scores badly for its poor environmental policy. It also has subsidiaries in three tax havens (Luxembourg, Singapore and Hong Kong) and supplies footwear to the US military.(8)
Nike has long been the subject of campaigns by all manner of organisations – see above. Like Adidas it was recently targeted by Greenpeace and, to its credit, the company also responded positively agreeing to phase out toxics by 2020.
It also recently came under scrutiny in Indonesia. In this instance it was over non-payment of overtime hours. Nike however agreed to compensate nearly 4,500 employees to the tune of $1million at one of its supplier factories for almost 600,000 hours of overtime clocked up over the past two years. However, workers allege they had been working overtime for the last 18 years without compensation.
Nike were also the focus of the aforementioned War On Want report ‘Race to the Bottom’. As with Adidas, researchers found that wages were poor and overtime was a necessity to boost meagre incomes, often over the 60 hours maximum set by the company and local laws.
One worker who worked at a factory supplying Nike alleged that the factory required her to work from 7am to 4pm six days a week. But almost every day her floor manager bullied her and forced her to work overtime, on average an extra 12 hours each week. Her basic salary was just 20p an hour. Researchers also found that discrimination and bullying were rife and that freedom to associate was curtailed.(3)
Nike is also a member of both the World Economic Forum and the American Chamber of Commerce both of which are key neo-liberal lobby organisations. The company also operates in several oppressive regimes including China, Indonesia, India, Israel, the Philippines, Russia, Sri Lanka, Thailand, and Vietnam. It was also present in several tax havens, including eleven in Bermuda plus others in Hong Kong, Ireland, Macau, Singapore and Uruguay.(6)
Patagonia has operations in China, Colombia, Israel, Philippines, Thailand and Vietnam all currently on Ethical Consumer’s list of oppressive regimes. It does however only use 100% organic cotton and scores best under supply chain management.
Puma was one of the few bigger companies to score top marks for its environmental policy. It has also phased out the use of PVC and does not use Merino wool. Like Adidas and Nike it has also promised to phase out all toxic chemicals by 2020 after being exposed in the Greenpeace investigation mentioned earlier.
However the company has also been plagued by workers’ rights issues. In February 2012, three women were shot at a supplier factory in Cambodia as they took part in a demonstration outside a factory to demand higher wages and better working conditions.(9)
The company was also noted in the War on Want report ‘Race to the Bottom.’ At one supplier factory more than half the workers researchers spoke to had been beaten, kicked, slapped or pushed by their managers. One in three had had their hair pulled, been publicly humiliated or forbidden from going to the toilet as a punishment. This was in addition to the payment of poor wages and excessive overtime.(3)
Meanwhile in April 2011 about 100 workers fainted at the Huey Chen factory, which supplies Puma and another 49 passed out at the same factory in July. Puma said it had implemented an improvement plan at the factory.(10)
Sergio Tacchini have negative scores due to their lack of policies. Their environmental reports score worst as do their supply chain management policies. They also fail to have any other policies Ethical Consumer considers necessary in this sector such as policies on leather production or cotton sourcing.
1 Branded: Michael E Conroy. New Society 2007
2 Nike factory interactive map www.nikebiz.com/crreport/content/workers-and-factories/3-11-0-interactive-map.php?cat=map
3 Chingdao Changshin Jimo Factor
4 Ref: 07008412291 Vietnam.pdf
5 ref. see e.g. Maquila Solidarity Campaign: Revealing Clothing 2006 Transparency Report Card
6 Looking for a quick fix How weak social auditing is keeping workers in sweatshops Clean Clothes Campaign, Nov 2005.